Project Summary/Abstract Cartilage injury and destruction affects over 46 million Americans and is the leading cause of disability in the US. Available clinical therapies include growth factor injection, microfracture, osteochondral autograft transfer, or chondrocyte implantation. However, current therapies are limited by inconsistent efficacy, long recovery times, chondrocyte dedifferentiation during in vitro expansion, and/or donor site morbidity. For example, while microfracture can induce cartilage defect coverage, the tissue formed is a functionally inferior fibrocartilage. Meanwhile, known chondrogenic signaling factors such as bone morphogenetic proteins (BMPs) or transforming growth factor (TGF)-?s also induce undesirable fibrogenesis and osteogenesis. We propose to utilize Nel-like molecule-1 (NELL-1), a differentiation factor with novel, cell- and stage- specific chondrogenic properties. NELL-1 is normally expressed in articular cartilage, and its loss results in abnormal cartilage formation. Remarkably, NELL-1 induces chondrogenic differentiation in both MSC and mature chondrocytes, prevents dedifferentiation, and induces hyaline cartilage formation without mineralization or fibrosis. This has led to our central hypothesis that optimizing NELL-1 formulation/delivery will promote increased chondrogenic differentiation and phenotypic maintenance with increased hyaline cartilage formation rather than fibrocartilage in cartilage injury models. To test this, we propose the following aims: AIM 1. Optimize NELL-1 formulation and delivery for chondrogenesis. Our AIM 1 working hypothesis is that optimized NELL-1 bioactivity via PEGylation and controlled release, coupled with a highly conformable, adherent, photocrosslinked hydrogel delivery system, when tested in vitro or in vivo in rabbits, will improve chondrogenic differentiation and function with increased hyaline cartilage formation and superior mechanical properties compared to our published data using a chitosan-based NELL-1 delivery system in rabbit articular subchondral defects. AIM 2. Define the role of NELL-1 in chondrogenic differentiation and phenotypic maintenance. Our data show that NELL-1 bioactivity exhibits cell-type and stage-specific effects. For example, NELL-1 requires canonical Wnt signaling activation for osteogenesis, but not necessarily chondrogenesis. Meanwhile, NELL-1 requires Indian Hedgehog (Ihh) signaling for chondrogenic effects. Our AIM 2 working hypothesis is that chondrogenic determination, differentiation and phenotypic maintenance requires coordinated interplay between NELL-1 and Ihh and/or Wnt signaling pathways in chondrocytes and/or chondroprogenitor cells. AIM 3. Determine NELL-1's efficacy in a large animal microfracture model. Our AIM 3 working hypothesis is that an optimized NELL-1 formulation with PEGylation, controlled release, and photocrosslinked hydrogel will effectively regenerate more hyaline cartilage with superior mechanical properties than TGF-?3 or microfracture alone in both load and non-load bearing articular knee defects in sheep.